So you've found something you love to do, you're good at it and – as an added bonus - people are willing to pay for you to do it!
For many people, freelancing sounds like the perfect ticket out of the rat race. In that case, there's no better time to break from the pack and launch your own business, escaping the daily grind for the freedom of freelancing, right? Maybe … and maybe not.
A Multifaceted Effort
Freelance careers are glorified by the media as the road to freedom. But before you walk away from that steady paycheck, make sure your freelance dream holds up to the reality check. In stark contrast to the nirvana-like dream many would-be freelancers have in their heads, experienced professionals might characterize the endeavor more like primitive survival.
First, you've got to plan your hunt. Searching for freelance work is just like conducting a traditional job search. Knowing what your target audience wants (and whether or not you can deliver a product or service that fills that need) is vital. (For more, read Planning For Unemployment.)
Next, you've got to put your plan into action. The idea that putting an ad in the Yellow Pages or hanging your name on the door of an office will result in clients beating a path to your door is pure fantasy. At the same time, if you take no action, the odds are against businesses finding their way to you. Be prepared to pitch your skill, over and over - and be prepared for rejection.
And you need to do it all the time. Unlike the traditional route, freelancers need more than one client to sustain their businesses, and the search for clients is an ongoing part of the business model. (Instead of working on Wall Street, write about it. See Becoming A Financial Writer, or read Getting To Know Business Models.)
Better Than the Best; Cheaper Than the Worst
Once you've actually found a client, you've got to do the work. When the work is finished, you've got to provide customer service. Of course, you need to do a better job than all of your top-tier competitors and, until you establish yourself as the best in the business, you'll need to do it at a lower price than your weakest competitors.
Your customer service skills also need to be top notch, should collections become an issue. A good client with temporary cash flow problems is not a business partner that you want to alienate in exchange for a short-term payoff - even if you need that check to pay the mortgage. (If an economic storm has your business taking on water, we provide tips for bailing yourself out. Read Keeping A Small Business Afloat.)
Dollars and Cents
You'll most likely work harder and earn less money as a freelancer than you did with a single employer. Though per-hour income may be greater than it was, the number of hours you work will be dependent on the number of clients that can be mustered. Also, keep in mind that when times are tough, you will be the first one cut. This can cause the money to dry up very quickly.
Taxes can also become a major issue. While the usual taxes that you paid when you worked for somebody else are still due, the portion formerly covered by your employer are now in your hands as well. Sure, you can write off your expenses, but many freelancers have to act as their own accountants, or hire one to do the work on their behalf. Keep in mind that taxes, payroll, vendor management, banking, healthcare and all administrative tasks fall into your hands, too. (Running your own business has both personal and financial perks. Read 10 Tax Benefits For The Self-Employed for more information.)
Should You Do It?
If you're considering becoming a freelancer, it's best to do so because you love your trade – not for the money. Do it because the typical nine-to-five isn't for you, or because you can afford to live on less than what you make when working for somebody else. Just don't do it because you think it's an easy, hassle-free way to get rich.
Not sure if you are ready to make that jump? Start your dream part-time. Dedicate your evenings and weekends to doing what you love to do. If you enjoy it enough to sacrifice your leisure time, and earn enough money or personal satisfaction to justify the time away from your friends and family, you just may be on the road to a full-time freelance career. (Your work environment can make or break your career as an entrepreneur. See Creating A Home Business Work Space.)
When the dollars and cents come together with conviction, it might be time to take the leap. Just do it wisely, and have a backup plan. It's best to have one year's worth of your former salary in the bank (and a spouse who works for a traditional employer and can provide income and healthcare isn't such a bad idea either). Those safety nets can come in handy if and when times get tough.
The Bottom Line
If your initial foray into the world of freelancing takes some of the luster off of the dream, consider sticking with it on a part-time basis. It's a great way to keep the dream alive and put a little green in your pocket at the same time. (Learn the pros and cons before you bid adieu to sales meetings and power suits forever in Be Your Own Boss By Freelancing.)